(Published in the CCF WA Bulletin, 2024 Edition 4)

There’s a scene in the ABC TV show Utopia where the Nation Building Authority’s Tony Woodford visits a government project site to figure out why labour costs are double the original estimates.

“You pay peanuts, you get monkeys,” an employee representative tells him. “Peanuts? That guy’s going to be on $120,000 a year,” Tony replies, gesturing towards a traffic controller. He goes on to point out that the traffic controller’s wage is $50,000 more than the government pays a high school teacher.

I was reminded of this scene while reading a recent AFR opinion piece by John Lloyd, the inaugural commissioner of the ABCC. Mr Lloyd compares the standard weekly wage of a traffic controller on the Melbourne Metropolitan Tunnel Project, $126,200 a year, with the starting salaries of nurses ($72,000) and teachers ($78,000) in Victoria, and notes: “A workplace relations system that produces such bizarre pay relativities is in strife”.

Recent developments here in WA suggest we may be heading in the same direction. In October, Main Roads WA made changes to its Traffic Management Company Registration Scheme, mandating a minimum ordinary hourly rate of $37.24 per hour for all traffic controllers on state roads – whether they’re working on a Main Roads project, or for any other client.

Traffic controllers must also receive all relevant loadings and entitlements in the Building and Construction General On-site Award 2020. An entry-level traffic controller’s base 38-hour week wage will now be $73,586 per annum, or $78,672 per annum with fares and travel allowance. Working a 50-hour week, they’ll be paid $116,851 per annum.

While the new government-mandated wage for traffic controllers is not at the absurd levels seen on eastern states major projects, it’s nevertheless way out of step with the typical wages for semi-skilled, entry-level Western Australian workers in construction and other sectors.

As our article on page 8 explains, Main Roads has acted in response to concerns about some isolated pay inconsistencies in the traffic management industry.

In our view, overriding the Fair Work system to impose a rate on the whole industry that’s 38% higher than the award is a massive over-reaction. The article explains why, and the effects this will have.

The seemingly random decision to overpay traffic controllers started to make a bit more sense in mid-November with the release of the Expression of Interest document for the Alliance Contract to design and construct Tonkin Highway Extension and Thomas Road Upgrade (Package 1 of 2). Under the heading ‘Industrial Relations’ the EOI notes: “Main Roads intends on mandating best practice industrial relations principles (BPIR) into the Project Alliance Agreement.”

At the core of BPIR is a government-sanctioned pattern agreement. In Queensland, it’s already in force and known as BPIC (best practice industry conditions). A typical BPIC agreement includes:

• Base pay rates more than 80% higher than award rates.
• A site allowance of up to $8.00 per hour (the maximum allowance kicks in at $700 million project value).
• A Fares and Travel Allowance of $50.00/day, more than double the BCGOA rate.
• A 36-hour week.
• Mandatory employer contributions to various income protection, redundancy, and welfare trusts totalling around $200 per week per employee.

All up, $130,000 per annum for a 36-hour week with no trade qualifications required. Bizarre, indeed.

Queensland Government agencies are careful to point out that BPIC isn’t mandatory, but contractors fully understand that if they don’t play ball, they won’t win the work.

As a guidance note from Brisbane law firm Gadens explains, BPIC is integral to the tender process, and is then embedded in the contract: “(BPIC) is a mandatory evaluation criterion, with all contractors commonly required to demonstrate: how they will provide terms and conditions of employment, including specific pay rates, for their employees who will perform work on the project, which are at least equivalent to the BPICs for the project; and the best endeavours process they will use to engage subcontractors or sub-subcontractors who provide terms and conditions of employment, including specific pay rates, for their personnel who will perform work on the project, which are at least equivalent to the BPICs.

“The commitments made by successful tenderers … will be included in the terms and conditions of relevant contracts and subcontracts on a cascading basis.”

Main Roads isn’t sure yet how the BPIR requirement will be worded in WA, although it’s been suggested there will be no room for negotiation – it will be expected that everyone on the site is paid the BPIR rates.

WA’s first iteration of BPIR will include rates on a par with the current METRONET head contractor enterprise agreements, around 35-40% over the award. Looking at the current rates in Victoria and Queensland, it’s likely that award disparity will keep climbing until we reach 70-80%. 

It’s reasonable to wonder why a government would insist on extremely high pay rates that will add to the cost of not only their own projects, but also the cost of land development and other private sector works. 

Only a few weeks ago, Deputy Premier Hon Rita Saffioti MLA rightly noted that infrastructure projects in WA had not suffered the type of cost blowouts seen on the Eastern States.

Surely, one of the reasons we have avoided massive blowouts is that wages on our major projects have not exploded, as they have in some other states. Yet here we are, lighting the fuse.

According to Main Roads, BPIR is needed to attract and retain more experienced civil construction workers. The problem with that argument is the wages currently available on major transport projects are already high by industry standards and already attracting the best people from elsewhere. Ask any land development contractor how hard it is to keep good employees.

Of course, industry also wants a skilled, experienced and well-paid civil construction workforce. But we believe blunt instruments like BPIR/BPIC are not the best way to achieve it, and a better outcome can be achieved with industry consultation.

Andy Graham
CCF WA CEO